US top destination for Commercial Property Investors

The United States dominates the list of places global commercial property investors would prefer to put their money this year, an annual survey shows.

The results reflect a rapidly growing optimism about the world's biggest economy.

For the first time since 2001, four of the top five cities investors said they favour were in the US, according to an annual survey that the Association of Foreign Investors in Real Estate (Afire) released yesterday.

The survey signals a sharp increase in positive sentiment regarding the US economy and property market for this year. Last year, 33 per cent held a pessimistic view but 81 per cent said they planned to increase their US holdings this year.

In the ranking of global cities in which to invest, New York and London came in first and second, respectively, as they did last year. But San Francisco rose to third from fifth and Houston, unranked last year, climbed to number 5.

"Houston was a surprise to us," said James Fetgatter, the Afire chief executive.

"San Francisco and Houston being in the top five global cities, it shows that this is where our people think the economy is going to revive. They believe these are where the drivers of the economy are going to be - in energy and tech."

Washington, while still a favourite, slipped to fourth from third, reflecting investors' concerns about how federal budget reductions would affect employment and, therefore, the demand for space in that city.

The survey of the association's nearly 200 members was conducted in the fourth quarter of last year by the James A Graaskamp centre for real estate at Wisconsin School of Business. Afire members have an estimated US$2 trillion (Dh7.34tn) or more in property assets under management. Forty-two per cent of the investors and 26 percent of the advisers are from the United States.

According to the Afire survey, the US also held its spot as the country investors said provided the most stable and secure property investment. Canada, Germany, Australia and the United Kingdom followed in the same order as they did last year. Sweden, which was unranked in last year's survey, tied with the UK for fifth place.

The US also held its spot as the country providing the best opportunity for property price appreciation, grabbing 55 per cent of the vote. Brazil came in a distant second with 17 per cent. The UK moved up to third from last year's fourth place while Turkey, which was ranked at number nine last year, jumped to fourth place.

China, which had been ranked third for price appreciation globally, was unranked this year, failing to receive one vote. Its cities also took a hit.

Shanghai, ranked at five last year, fell to 12th this year. Hong Kong, number 8 last year, fell to 19th. "Everybody is concerned about China's economy slowing, and there's a little uncertainty about the change in leadership," Mr Fetgatter said.

Europe also did not fare well. About 80 per cent of the respondents said they believed Europe was likely to remain in recession this year.

Within the US, New York remained the top choice among investors. San Francisco displaced Washington, in second as the US capital slipped to third, San Francisco's former spot. Houston was at number four, up from seventh. Boston, fourth last year , was fifth this year.

Among emerging markets, Brazil once again was ranked top. China remained second, while, Turkey moved up to third from seventh last year. India, which had been third, slipped to fourth to tie with Mexico, up from fifth.